Learning the Difference Between Legitimate Loans and Loan Schemes?

Getting a loan is a difficult enough process as it is. There are several factors involved in such a process, like getting approved, setting a limit, getting your credit report and credit score checked, reading all the paperwork and terms and agreements, and then paying it all back once you have spent money on credit. Still, there are people out there who have made the process even more tiresome because of fraud.

Many credit lenders are good, yes. Still, there are several out there who claim to be "credit lenders" who are actually just out to get your money and ruin your credit history for you. These kinds of "lenders" are the kind we need to watch out for. They are the ones who can get us even further into debt than we had actually planned to be when we first started out getting a loan, therefore leaving us with ruined credit and eventually leading us into bankruptcy.

Sometimes it is difficult to determine who will cheat you out of your money and who is honestly looking to do business with you and give you a fair loan. How do you tell the difference between legitimate loans and scams? Here are a few things that will pose as a red flag as you search for a lender, letting you know the signs that who you are dealing with may just be in it for your money and who have no intention of lending you money whatsoever.

The whole point of getting a loan is to borrow money so that you can pay it back later. Some scam artists will ask you to make a deposit using things like money orders, so that you "secure" your loan. This is not the same thing as collateral. Legitimate banks will most likely not ask you for a deposit, and anyone who does should no longer be on your list of possible lenders, because in most cases, these are they who will take that deposit and run.

Some lenders offer credit insurance and other benefits that go with the loan that you are applying for. However, many of these "benefits" cost you extra money, when a lot of them may not even do you any good. Make sure you read ALL of the fine print before you sign any papers, ask if there are any extra packages that come with the loan, and how much you will be paying for it. If these extra packages are useless to you, don't let them pressure you into getting them, no matter what tactics they use.

As with any circumstances, you should be reluctant to give out your personal information. Be careful of who you allow access to your social security number or your driver's license information. Many honest and legitimate lenders will not ask for such information. If you give this kind of data to someone you do not completely trust, you may end up suffering from identity theft and other types of credit-devastating fraud.